Europe’s lumbering efforts to end a widening sovereign debt crisis have become more cumbersome as the German parliament is now wielding its newly created veto powers that allow lawmakers to block virtually any decision Chancellor Angela Merkel makes that commits taxpayer money to new bailouts.
Passage of a resolution by Germany’s otherwise staid budget committee on Friday draws the lines within which Merkel must remain when she negotiates with European leaders at a summit on Sunday and adds a new dimension to European power politics.
The resolution requires Merkel to reject any deal on the European Financial Stability Facility, or EFSF, that would grant the euro-zone bailout fund a banking license and allow it to borrow money from the European Central Bank. Merkel must also reject any deal that would expand German guarantees pledged to the 440 billion euro ($609 billion) fund that go beyond current German pledges of EUR211 billion.
Not a lot of flexibility there, folks. (Copied from the Wall Street Journal)